A former US Marine pleaded not guilty on Wednesday over the choke-hold death of a homeless man on the New York subway, prosecutors said, in a divisive case spotlighting mental illness and public safety in America's biggest city.

Daniel Penny, 24, was arraigned in Manhattan and pleaded not guilty to second-degree manslaughter and criminally negligent homicide in the death last month of Jordan Neely, a spokesman from the Manhattan District Attorney's Office told AFP.

The manslaughter charge accuses Penny of "recklessly" causing the death of 30-year-old Neely, but stops short of saying he had intent to kill.

If convicted, Penny could spend up to 15 years in prison.

Neely's death on May 1 sparked outrage after it was caught on camera, and brought into sharp focus two burning issues in New York: mental illness among those living on the streets, and residents' fears for their safety on public transit.

Video shared widely on social media showed Neely on the ground of a subway train as Penny appears to hold him around the neck for several minutes in front of a few onlookers.

Penny "continued his chokehold for several minutes, including after Mr. Neely's body stopped moving," a statement from the Manhattan District Attorney's Office said.

Witnesses said the serviceman allegedly restrained Neely after the latter was screaming at passengers for food and drink and said he was willing to die.

Neely was reportedly not physically threatening anyone.

Family and friends told local media that he had a history of mental illness, like many living on the streets in the city of almost nine million residents.

The incident also had a racial element -- Neely was Black and Penny is white.

Protests erupted in New York after Neely's death, resulting in several arrests, as some decried Penny's actions as an example of white "vigilantism."

While many on social media condemned the level of force used, some voiced fears for their safety on New York's subway.

The city's medical examiner said that Neely was killed by "compression" of the neck, and ruled the death a homicide.

A crowdfunding effort in support of Penny -- touted by many Republican figures, including Florida governor and presidential candidate Ron Desantis -- has raised more than US$2.9 million on GiveSendGo, a platform known for facilitating funding of far-right figures. (AFP)